Do you ever look at the reports from your accounting software and get bamboozled by all the numbers? Do you not bother printing out the reports at all because you aren’t sure which numbers to look at and you don’t have the time anyway?

You’re not be alone if you answered yes to either of these questions.

A typical set of financial reports i.e. Profit and Loss Statement and Balance Sheet contains a lot of numbers and it can be a daunting task to make sense of it all and know which numbers are the important ones.

Of course they are all important but some are absolutely critical to financial success in business.

Most of the ‘Seven Key Numbers’ are not contained in a typical set of financials, which is a frightening thought, considering they are absolutely vital to profit and cash-flow. This is because these numbers are ‘Financial Drivers’ rather than ‘Results’.

The typical financials provided to most business owners are for tax purposes rather than management use.

The Seven Numbers are:

  1. Revenue Growth %

  2. Price Change %

  3. COGS% (Cost of Goods Sold)

  4. Operating Expenses%

  5. Days Receivable

  6. Days Payable

  7. Days Inventory/Work in Progress

Let’s explain why these seven numbers are so critical.

Revenue Growth % – Business owners focus a lot of attention on Revenue and making sales and this is obviously critical. What is even more critical though is what those sales cost you to make and also cost you to fund. As soon as you sell something, and often well beforehand there are costs involved e.g. goods for sale, freight, labour, overheads etc.